Is the individual business whose revenue from business operation in the calendar year is not exceeding 100 million VND considered a value-added taxpayer in Vietnam?

Is the individual business whose revenue from business operation in the calendar year is not exceeding 100 million VND considered a value-added taxpayer in Vietnam?

Based on Clause 2, Article 4 Circular 40/2021/TT-BTC, the regulations are as follows:

Principles of Tax Calculation

1. The principles of tax calculation for household businesses and individual businesses are implemented in accordance with current legal regulations on value-added tax (VAT), personal income tax (PIT), and other related legal documents.

2. Household businesses and individual businesses with annual revenue from production and business activities in a calendar year of VND 100 million or less are not required to pay VAT and PIT according to the legal provisions on VAT and PIT. Household businesses and individual businesses are responsible for declaring taxes accurately, honestly, and fully, and for submitting tax dossiers on time; they bear legal responsibility for the accuracy, honesty, and completeness of the tax dossiers as prescribed.

3. For household businesses and individual businesses operating as a group of individuals or a household, the annual revenue threshold of VND 100 million or less to determine individuals not subject to VAT and PIT is determined for a single representative of the group in the tax year.

As such, individual businesses with annual revenue in the calendar year of VND 100 million or less are not subject to value-added tax.

Is the individual business whose revenue from business operation in the calendar year is not exceeding 100 million VND considered a value-added taxpayer in Vietnam? (Image from the Internet)

What are taxable objects in Vietnam?

According to Article 3 of the Law on Value-added Tax 2008, the subjects liable to value-added tax are goods and services used for production, business, and consumption in Vietnam, except for those specified in Article 5 of the Law on Value-added Tax 2008.

What are non-taxable objects in Vietnam?

According to Article 5 of the Law on Value-added Tax 2008, as amended by Clause 1, Article 1 of the Amended Law on Value-added Tax, Excise Tax, and Tax Administration 2016, Clause 1, Article 1 of the Amended Law on Value-added Tax 2013, and supplemented by Clause 1, Article 3 of the Amended Laws on Tax 2014, the following subjects are not liable to value-added tax:

- Agricultural and aquaculture products that have not been processed into other products or only undergone basic processing by the producing organization or individual and are sold out, including those at the import stage.

Enterprises, cooperatives buying unprocessed or simply processed agricultural and aquaculture products to sell to other enterprises or cooperatives are not required to declare and pay VAT but are entitled to input VAT deduction.

- Breeding animals, breeding plants including seed eggs, seed animals, seedlings, seeds, semen, embryos, and genetic materials.

- Irrigation and drainage; soil plowing; dredging of inner field canals and ditches serving agricultural production; agricultural product harvesting services.

- Fertilizers; specialized machinery and equipment for agricultural production; offshore fishing vessels; livestock, poultry, and other animal feed.

- Salt produced from seawater, natural rock salt, refined salt, iodized salt with sodium chloride (NaCl) as the main component.

- State-owned housing sold to current tenants by the State.

- Land use right transfer.

- Life insurance, health insurance, student insurance, other insurance services related to people; animal insurance, plant insurance, other agricultural insurance services; insurance of fishing vessels, equipment, and necessary tools for directly catching fisheries; reinsurance.

- The following financial, banking, and securities trading services:

+ Credit granting services including lending; discount, rediscount of negotiable instruments and other valuable papers; guarantees; financial leasing; credit card issuance; domestic factoring; international factoring; other forms of credit granting as regulated by law;

+ Taxpayer lending services that are not credit institutions;

+ Securities trading including securities brokerage; securities self-trading; securities issuance underwriting; securities investment advisory; securities custody; securities investment fund management; securities portfolio management; market organizing services of stock exchanges or securities trading centers; other securities trading activities as regulated by law on securities;

+ Capital transfer including partial or full transfer of invested capital, including selling an enterprise to another enterprise for production, business, securities transfer; other forms of capital transfer as regulated by law;

+ Debt sale;

+ Foreign exchange trading;

+ Derivative financial services, including interest rate swaps; forward contracts; futures contracts; currency options; other derivative financial services as regulated by law;

+ Selling collateral assets of an organization owned 100% by the government of Vietnam, established to handle bad debts of Vietnamese credit institutions.

- Medical services, veterinary services, including medical examination, treatment, and disease prevention services for people and animals; care services for the elderly and people with disabilities.

- Public postal, telecommunications, and Internet services under government programs.

- Services maintaining zoos, flower gardens, parks, street greenery, public lighting; funeral services.

- Maintenance, repair, or construction funded by people's contributions or humanitarian aid for cultural, artistic, public utility, infrastructure works, and housing for social policy beneficiaries.

- Education and vocational training as prescribed by law.

- Radio and television broadcasting funded by the state budget.

- Publishing, importing, and distributing newspapers, magazines, bulletins, specialized publications, political books, textbooks, syllabi, legal documents, scientific and technical books, books printed in minority languages, propaganda posters, including those in audio, video, or digital data form; currency and currency printing.

- Public passenger transport by bus and electric tram.

- Machinery, equipment, spare parts, materials not yet produced domestically and necessary for scientific research and technological development activities; specialized machinery, equipment, spare parts, transport means, and materials not yet produced domestically and necessary for oil and gas exploration and development activities; aircraft, drilling platforms, and ships not yet produced domestically and necessary for enterprise asset creation or leased from abroad for production, business leasing, and sub-leasing.

- Special-use weapons and equipment serving national defense and security.

- Goods imported in the case of humanitarian aid, non-refundable aid; gifts for state agencies, political organizations, political-social organizations, socio-political-professional organizations, social organizations, socio-professional organizations, and people's armed forces units; gifts for individuals in Vietnam as regulated by the government; items of foreign organizations and individuals entitled to diplomatic immunity; items carried by immigrants within duty-free luggage limits.

Goods and services sold to foreign organizations and individuals, international organizations for humanitarian aid and non-refundable aid to Vietnam.

- Goods in transit, transshipped through Vietnamese territory; temporarily imported goods for re-export; temporarily exported goods for re-import; imported raw materials for producing and processing exports under processing contracts signed with foreign entities; goods and services bought and sold among foreign entities and duty-free zones or among duty-free zones.

- Technology transfer under the Law on Technology Transfer 2017; intellectual property transfer under the Law on Intellectual Property 2005; computer software.

- Imported gold in bar or ingot form not yet processed into jewelry, artworks, or other products.

- Export products are resources and minerals that have not been processed into other products; export products are goods processed from resources and minerals where the total value of resources, minerals, and energy costs is 51% or more of the product cost.

- Artificial products used to replace parts of the human body; crutches, wheelchairs, and other specialized tools for the disabled.

- Goods and services of households and individual businesses with annual revenue of VND 100 million or less.

Business establishments trading goods and services not liable to value-added tax under Article 5 of the Law on Value-added Tax 2008 are not entitled to VAT deduction and refund for input VAT, except for cases applying a 0% tax rate as prescribed in Clause 1, Article 8 of the Law on Value-added Tax 2008.